Lack of pipelines, infrastructure cripples Canada’s ability to compete

CAPP report calls for a clear government commitment to resource development and a competitive fiscal environment

Mario ToneguzziCanada has an abundance of natural resources, but a lack of pipelines and insufficient infrastructure are crippling our ability to compete for global market share, says a new report by the Canadian Association of Petroleum Producers.

“Before they will invest in Canada, global investors need to see that the Canadian federal and provincial governments are firmly committed to resource development,” said Tim McMillan, president and CEO of CAPP, in a statement. “Global energy demand is growing; however, without new pipelines, Canada’s oil and natural gas industry can’t compete for a share of the global market. Instead, growing demand will be filled by other countries like Iraq, Libya and the United States.

“Canada is missing an opportunity to have our energy play a key role in reducing global greenhouse gas emissions by displacing energy from other countries who don’t have our high environmental standards.”

The report, Leveraging Opportunities: Diversifying Canada’s Oil and Natural Gas Markets, said global markets for liquefied natural gas (LNG) are expected to expand substantially by the mid-2020s, yet Canada is not moving quickly enough to capitalize on this growing demand.

Tim McMillan
Tim McMillan

“In addition, failure to reach these high-growth markets means we are missing an opportunity to help reduce net global greenhouse gas emissions (GHGs). Coal-fired electricity generation in China, India, Southeast Asia, and Europe could be displaced using Canadian LNG, which has lower life-cycle emissions than LNG from other countries,” said CAPP.

“Likewise, Canada is missing out on the opportunity to export responsibly produced oil to those same emerging global markets in China and India because there is not enough pipeline capacity nor access to tide water.

“CAPP has identified the barriers preventing Canada from realizing these opportunities. The path forward must include a clear government commitment to resource development, a competitive fiscal environment, and an efficient regulatory process to enable new projects to be approved and constructed in a timely manner. CAPP recommends the government of Canada make meaningful and substantial changes to Bill C-69 which, as it stands now, will only compound the problems of our already protracted regulatory process. CAPP also calls for the government to withdraw Bill C-48, which proposes a tanker moratorium on a significant portion of Canada’s West Coast.”

According to CAPP:

  • in the International Energy Agency’s World Energy Outlook 2018 (New Policies Scenario), total global energy demand is projected to increase 27 per cent over 2017 levels by 2040;
  • together, oil and natural gas will account for 53 per cent of the world’s total energy demand by 2040;
  • capital investment in Canada’s oil and natural gas sector dropped to about $41 billion in 2018, down from $81 billion in 2014. It is expected to drop another 10 per cent in 2019;
  • Canada’s oil and natural gas sector accounted for 5.34 per cent of real Canadian GDP in 2017.

Mario Toneguzzi is a Troy Media business reporter based in Calgary. He writes for Calgary’s Business.

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